AUD/USD breaks 0.72 on better risk-mood in Asia

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 5, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Guatemala) - AUD/USD is making a small recovery as Asia gets going with full markets returning this week in a heavily bearish start to the year for the pair.

    The risk-sentiment is turning in Asia with a come-back in Chinese stocks after yesterday's nightmare day for bulls that was provoking a new circuit breaker rule, suspending trading nationwide for the first time. It was the Shenzhen Composite that was the biggest shocker, crashing 8.2 per cent, its biggest fall in nine years while the Shanghai Composite index finally settled 6.9 per cent lower.

    The bearishness stems from a) the state of and the underlying structural positioning the Chinese financial trading arena with the last summers ban on selling of Chinese stocks by large shareholders that were due to expire at the end of this week, b) the manufacturing sector and c) the currency weakening. The market's concerns prompted a flight to safety and metals and commodities in general were hit and the Aussie's yield was not attractive enough. It would be prudent to watch out for further weakness in the Yuan and soft commodities in dealing with the Aussie's direction. At the same time, monitoring the PBoC==a> and looking for stimulus will be key as well as noting how the RBA foresee a continued contraction in the Chinese economy is looking for Australia.

    AUD/USD levelsTechnically, 0.7199 is where the 20 SMA on the hourly sticks was located and a breakthrough here onto the 0.72 handle with closes is required to allow for some near term recovery on the upside.

    To the downside, the 100 DMA at 0.7173 is guarding the overnight 0.7155 low before the 3-month uptrend at 0.7086 should be respected as well as the 0.7017 November low and the September low is at 0.6940 for the downside levels.
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